NCAA blew through rainy day fund intended for disaster like pandemic: Reports
The funds were spent on a lawsuit settlement and scholarship expansion.
The NCAA spent approximately $400 million that was previously set aside in the event of a canceled March Madness basketball tournament.
The NCAA March Madness basketball tournament was canceled earlier this year because of the coronavirus, which cost schools $375 million and the NCAA more than $800 million in missed revenues.
In 2004, the college athletics organization started preparing for a canceled tournament by building up a fund of about $500 million to protect itself and colleges from potential revenue losses. But over the last few years, the organization spent it.
According to reporting by USA Today and the Washington Post, by 2017, the NCAA had spent approximately 80 percent of the fund. The outlets reported that in 2015, new officials began spending over $400 million and did not increase insurance coverage for a lost tournament.
“It was a managerial error,” one former NCAA employee told The Washington Post. “They made a decision to be exposed. … This didn’t have to happen.”
Half of the $400 million was reportedly given to schools in 2016 after changes in scholarships allowed for colleges and universities to include attendance costs in scholarship amounts. The other half was spent on a settlement for a class-action lawsuit. The NCAA paid the full settlement, despite being only one of twelve co-defendants.
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Former NCAA employees said the organization spent the money because college sports officials like Notre Dame Athletic Director Jack Swarbrick argued that the cash reserve would invite lawsuits.
Jeffrey Kessler, who was a lead attorney on an antitrust lawsuit against the NCAA, called the reasoning “absurd.”
“The word ‘absurd’ seems entirely appropriate,” Kessler said. “This just sounds like frankly another NCAA fabrication to justify an action that didn’t make any sense and now exposes them in the face of this pandemic.”
[RELATED: NCAA cancels March Madness amid coronavirus fears]
The NCAA appeared to shift the blame to university presidents.
In a phone interview with The Washington Post, the organization’s chief operating officer, Donald Remy, said the decision to spend money from the savings fund was made by university presidents and not by NCAA executives.
“To suggest that the management made an error, I think, misunderstands our structure,” Remy said. “It was a pretty prudent amount of insurance for an event that was likely never going to occur. … Clearly we got a pandemic, and it did occur.”
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